8-K Recy no longer
Item 5. Other Events.
Termination of Chapter 11 Proceeding
As previously reported on Form 8-K filed March 12, 1999, on February 26,
1999, Recycling Industries, Inc. and its operating subsidiaries (collectively
the "Debtors") filed voluntary petitions for relief under Chapter 11 of the
Federal Bankruptcy Code (the "Bankruptcy Cases") in the in the United States
Bankruptcy Court for the District of Colorado (the "Bankruptcy Court").
On December 4, 2000, the Court commenced a hearing in connection with a
revised Second Amended Joint Plan of Reorganization for the Debtors (the "Plan")
proposed by the Official Unsecured Creditors' Committee (the "Committee"), the
Former Owners Group ("FOG"), Credit Suisse First Boston ("CSFB") and Commercial
Metals Company ("Commercial," and together with the Committee, FOG and CSFB, the
"Plan Proponents"). At the December 4 hearing, the Plan Proponents announced
that they did not have sufficient funding to confirm the Plan and, therefore,
they were withdrawing the Plan. Based upon that fact, and the fact that no
other plan of reorganization or transaction was pending, the Bankruptcy Court
announced that, unless circumstances changed at a status hearing to be held on
December 6, 2000, the Bankruptcy Court would dismiss the Bankruptcy Cases at
5:00 p.m. on December 6, 2000.
Between December 4 and December 6, 2000, the Debtors, General Electric
Capital Corporation ("GE"), as a lender and as the Agent for a group of Senior
Secured Lenders (the "Lenders"), and FOG had numerous discussions regarding the
willingness and ability of the Lenders and/or FOG to fund the Debtors'
continuing operations and regarding the structure of a proposed transaction
whereby the Debtors would be sold as operating, going-concerns. On December 6,
2000, the Bankruptcy Court conducted a status hearing on the Bankruptcy Cases.
At that status hearing, it was reported to the bankruptcy court that the Lenders
had not agreed to fund the Debtors' continuing operations, that FOG had not
agreed to fund the Debtors' continuing operations, and that FOG and the Lenders
had not reached any agreement on any transaction that would result in a plan of
reorganization or a sale of the Debtors' assets as going concerns. Accordingly,
the Bankruptcy Court entered its order dismissing the Debtors' Bankruptcy Cases
effective at 5:00 p.m. on December 6, 2000.
Subsequent to the dismissal of the Bankruptcy Cases, the Debtors, GE and
FOG had continued discussions regarding funding. Neither the Lenders nor FOG
committed to provide funding necessary to enable the Debtors to continue
operations. In the absence of funding commitments, the Debtors were not able to
continue operations and the Debtors were not able to pay ongoing obligations and
liabilities. Accordingly, on December 8, 2000, on less than 24 hours notice, the
Debtors were forced to cease all operations and terminate their 450 employees to
ensure that the Debtors did not incur liabilities and obligations that they were
not able to satisfy. The Lenders requested that, since the Lenders claimed a
first-priority, properly perfected, security interest in and lien upon
substantially all of the Debtors' assets, the Debtors cooperate in the peaceful
turnover and surrender of the Debtors' assets to the Lenders. The Debtors agreed
to peacefully surrender and turnover their assets to the Lenders and their
agents. During the week of December 11, 2000, the Lenders and their agents took
custody and control of the Debtors' assets, including all of the Debtors'
operating facilities.
Walt |
